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Designing hardware for market access

The Apple iPhone typically has 178+ third-party components that are manufactured and assembled in over 30 countries. The phone itself is assembled in another country, by another third-party.

Designing hardware for market access

© Tyler Lastovich

Are you investing in a box of chocolates or a can of worms?

A single proprietary hardware device is actually a collection of third-party components, mostly off-the-shelf and almost all sourced globally. What makes it proprietary is the customised assembly and control software, and possibly bespoke design of some components. It is the components, known as the ‘BOM’ (Bill Of Materials), and not the sales effort that typically dictates the investment feasibility.

The BOM supply chain is crucial. Alternative suppliers or substitute components are essential to mitigate supply chain interruptions. And even with guaranteed supply, delivery times can often exceed order fulfilment times, requiring up-front expenditure on stock well in advance of confirmed sales.
Regulatory compliance is a major cost. Local and import regulations vary by geography and typically require expensive independent testing. In some countries regulations are protectionist, making access to markets unachievable without an expensive redesign or expensive partnering with local actors.

Hardware is also subject to export controls, which can limit the country of onwards shipping based on the country of origin of BOM components. And as performance continues to accelerate, many products inadvertently become capable of dual use, particularly encryption, and so fall under military export controls as well.

Designing hardware for market access
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